Shale gas commercial mining curtain opens the benefit of superhard materials company
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September 04 00:00:31, 2025
Since 2007, the U.S. shale gas production has experienced rapid growth, leading to a significant drop in natural gas prices and triggering an energy revolution. According to a report by the U.S. Energy Information Administration, China possesses the world's largest recoverable shale gas reserves, prompting the country to start exploring and developing its own shale gas resources. However, the high cost of drilling and the complex geological conditions have made it challenging for China to achieve commercial success in shale gas exploitation. Many experts remain skeptical about the feasibility of large-scale commercial development.
Recently, Sinopec made a major breakthrough by successfully extracting commercial-scale shale gas from a test well group in the Fuling area. In October this year, the National Energy Administration introduced the "Shale Gas Industry Policy," officially integrating shale gas development into the national strategic emerging industries. The policy encourages diverse investment entities to enter the shale gas market, provides financial support for exploration, and implements market-based pricing for ex-factory shale gas prices. It also promotes local use and pipeline access, marking a turning point in China’s shale gas industry.
Compared to traditional coal or metal mining, oil and gas drilling involves deeper depths, harder rock formations, and more complex geological environments. Shale gas extraction is even more demanding, with high risks and costs involved. Synthetic diamond compact (PCD) drill bits are currently the most suitable tools for such conditions, but they require exceptional quality, stability, and durability. Due to high technical barriers, only a few companies, such as Zhongnan Diamond, Yellow River Cyclone, and Sifangda, have the capability to produce high-quality PCD drill bits.
As the world's largest manufacturer of synthetic diamonds, Zhongnan Diamond holds a strong position in the super-hard materials industry, with advantages in R&D capabilities, supply chain integration, product quality, and competitive pricing. In September, the company completed a backdoor listing through Jiangnan Red Arrow (000519), aiming to raise 1.323 billion yuan to support five key projects. Among these, a 168 million yuan fund is allocated for the PCD industrialization project, which targets both super-hard material tools and oil and gas drilling applications.
According to estimates, the domestic market for oil and gas PCD drill bits reached 3.6 billion yuan in 2013, while the global market exceeded 65 billion yuan. Currently, the core market for oil and gas PCD products is still dominated by foreign suppliers. The PCD project launched by Jiangnan Red Arrow is filling a critical gap in the domestic market, positioning itself to replace imported products and create new profit centers for the company.
In addition, China accounts for approximately 80% of global synthetic diamond production, and its artificial diamond products are widely recognized by international customers. As shale gas commercialization progresses, demand for synthetic diamond products is expected to rise, benefiting listed companies in the super-hard materials sector. This trend highlights the growing synergy between energy innovation and advanced material industries in China.